HSBC Holdings PLC (LSE:HSBA) is going to pay out handsome amounts to shareholders for the next few years at least, according to the analysts at US peer Bank of America.
BofA sees scope for US$23 billion shareholder payouts this year (2023) from HSBC, normalising to US$16 billion in the following 12 months, which is still the equivalent of an 11% ongoing yield.
Costs are forecast to grow at 5% a year to 2026, BofA said, but it expects the continued investment to accelerate revenue growth across Asia after 2024.
In short, BofA argues that a sustainable 14% Return on Tangible Equity in the present yield curve environment and a sustainable 5% revenue growth rate make the six times 2025E PE ratio "compelling".
The target price is trimmed to 760p from 790p, but BofA sticks with a ‘buy’ rating.
Shares rose slightly to 619p.